Payday loans are suitable for borrowers who are able to pay them back on time by their next payday. If the borrower is applying for payday loans online, he may even be approved within a few hours.
These loans can be used for paying unexpected bills, travel expenses or buying something you urgently need. They are extremely fast to get and that makes them unique.
Who can get a payday loan?
People who are at least 18 years old, have a monthly salary and a checking account are eligible for payday loans.
It doesn’t even matter if the customer has bad credit history. The market is highly competitive which means that it is easy to find a lender that offers both a good rate and fast approval.
The cash is deposited directly into your checking account within a few hours upon approval.
Advantages and benefits of payday loans
If you are considering of applying for a payday loan, you should take into consideration their advantages and benefits:
1. First of all, these loans are extremely convenient and fast sources of cash during a financial emergency. For example, if your car has broken down, have a medical bill, or you need some extra help paying the monthly rent, a loan can provide the money you need within a matter of hours.
The loan actually provides you the cash that you can use immediately and spend on anything.
A credit card, for example, may give you access to credit but you won’t be able to get it all in cash. So, if the card has a $10,000 limit, you might only be able to take out $2,000 in a cash advance. A payday loan, on the other hand, provides you with money you can spend right away.
2. This leads to the next advantage – their flexibility. Once you get the money, you are able to spend it in whichever way you like. Other types of loans have some limitations.
For example, a mortgage or a car loan requires you to spend the money on a house or a car.
3. Payday loans are very easy to qualify for and require no credit check. If you have a poor credit score or haven’t established a credit rating yet, your eligibility for a payday loan will not be affected.
It is not necessary to have an excellent credit rating to get a loan. Most lenders only want to know whether you have a job and are able to repay in time. If you meet those qualifications, you should not have problems with obtaining the loan amount. Other types of credit require a good credit score.
4. They may even save you some money. If you cover your bills with a short-term loan, you may be able to avoid charges for bounced checks, bank overdrafts and credit card fees.
5. Using such loans can protect your credit score because when you take out a payday loan to cover your financial obligations, you can avoid adverse impact on your credit rating.
6. Give you independence. If you are young and still have to learn how to balance your monthly budget, you may not always manage to save enough to meet your expenses. It saves you from asking your friends and family for money.
7. The main advantage is their speed of approval. They are usually meant for short-term advances of $1000 to $5000. The application and approval process is usually quick and convenient and are often completed entirely online.
This is very attractive to borrowers since the application process can be carried out without having to visit the bank or wait for too long for the approval. Approval often happens in just a few minutes. The loan amount is transferred via direct deposit to the borrower’s bank account.
8. In case you don’t want to apply in oerson lending stores are usually convenient and easy to deal with. They have more flexible working hours than banks and have email, phone or live chat support. All this makes it much easier to apply for the loan and make on-time repayment.
When do I get my money?
There are several things you should take into consideration when applying for a payday loan:
- 1. First of all, you should know the exact amount of money you need. You have to be sure that you require a short-term loan that you are able to repay on time.
- 2. To qualify, you need a steady source of income, an ID, a valid address and phone number and a valid checking account. Applicable income sources can be a full- or part-time job, social security or disability, self-employment and even alimony or child support.
Lenders may have different restrictions on what they will allow for proof of income and different methods of verifying the personal information. For example, a single phone call is enough to verify the phone number.
- 3. There are many payday lenders out there. Therefore, it is necessary to choose what is most suitable for you.
- 4. Next, you have to choose the most convenient method of application. This can be either a trip to the loan store or filling out an online form. Usually, approval is very fast. The application process may vary slightly between the two options.
In-store may have a faster turnaround time than online loans if the borrower has all the required documentation.The required time for approval of an online payday loan depends largely on whether the lender allows for no-fax payday loans. With all the correct documentation, a no-fax online payday loan can be approved in just minutes.
If the lender does not allow fax-less payday loans, then the application cannot be approved until the borrower faxes over the documents needed.
Therefore, loans that require faxing will have a longer approval time. The approval process and state law will require for additional documents to be sent in by fax to the lender.
The borrower will determine how fast he will be approved by the time it takes for him to send the documents.
- 5. After being approved, you have to sign the contract which details terms such as rates, terms, fees and repayment date.
- 6. After you have signed the contract, it may take several hours or up to one business day to receive the loan amount.
- 7. When the time is due, repayment will be automatically withdrawn from your account or your post-dated check will be encashed. There is also the possibility of paying up by personally bringing the cash to the store.
How much should I borrow?
When taking out a loan, the amount you are qualified to receive depends on several factors. Among them are income level and state of residence.
You may be able to receive a higher loan amount if you apply online rather than applying in-store.
Depending on applicable law, the maximum loan amount may be subject to different terms. You can easily determine the maximum amount available to you by visiting a lender’s store or website.
- Loans are based on the borrower’s income. Therefore, lenders will request proof of steady employment or other income. How much money you make monthly will determine the initial amount you are able to borrow. This acts as a safety measure that keeps your payday advance loan from exceeding the amount you can manage to repay by the next payday, excluding other expenses.
- The state of residence is another factor that determines how much you can borrow. First of all, different states have different legislation regarding payday lending and some of them have restrictions on the maximum loan amount. Therefore, it is very important where the borrower live. Secondly, the lender’s state of residence is also important because the lender may practice the so-called “choice of law”. This allows the lender to apply rules and regulations of their state of residence to loans taken out by lenders from a different state. That is a common practice for online lenders.
- Lastly, before choosing the loan amount you want to apply for, you should consider not only how much money you need, but also how much money you can afford to repay. This is the most important factor when it comes to determining how much money you should borrow.